Optimise SME Performance with Effective Systems and Procedures

Elevate your business success with a focus on strategic leadership and robust internal controls. Discover the impact of skilled management practices, clear goal-setting, and proactive risk management in fostering efficiency and innovation.

Watch this video to better understand the topic: Introduction to management and controls

Systems and Procedures for SMEs: Essential Management Strategies for SME Success

Unlock the potential of your small or medium-sized enterprise (SME) by prioritizing management and controls. In today's competitive landscape, effective oversight and strategic management are essential for sustainable growth. Understand why SMEs must cultivate robust management practices to streamline operations, optimise resources, and mitigate risks. From budgeting and inventory management to quality control and compliance, learn how implementing strong controls can enhance efficiency, reduce costs, and foster resilience. Empower your SME with the knowledge and tools needed to navigate challenges and capitalize on opportunities in a dynamic business environment. Take control of your business's destiny with proactive management strategies tailored to the unique needs and goals of your SME.

Unlock SME Potential with Effective Systems and Procedures

• Effective management and controls are crucial for the success and sustainability of businesses. Firstly, businesses should prioritise robust leadership and management practices. This involves having skilled and visionary leaders who can set clear goals, communicate effectively, and make informed decisions. Strong management ensures that resources are allocated efficiently, employees are motivated and aligned with organisational objectives, and risks are identified and addressed proactively. Additionally, a transparent and accountable management structure fosters a positive organisational culture, promoting collaboration and innovation.
• Secondly, implementing effective controls is essential to mitigate risks and ensure compliance. This includes establishing internal controls to safeguard assets, prevent fraud, and maintain accurate financial reporting. Regular audits and assessments should be conducted to identify areas for improvement and ensure that controls are adapted to evolving business environments. Compliance with relevant regulations and industry standards is crucial, as failure to adhere to legal requirements can lead to financial penalties and reputational damage. Moreover, businesses should embrace technology to enhance controls, such as utilising data analytics for monitoring and predictive modeling to anticipate potential issues. By integrating strong management practices with effective controls, businesses can enhance their operational efficiency, reduce risks, and position themselves for long-term success.

Introduction to management and controls

Strategic Systems to Optimise Performance - Entrepreneurship Lessons from Movies The Founder, War Dogs and Moneyball

• The Founder (McDonald's): The McDonald's Brothers, Richard and Maurice McDonald, laid the foundation for effective management and controls at McDonald's through their innovative "Speedee Service System" in the 1940s. They introduced a highly efficient and standardized operating model, focusing on a limited menu, assembly-line production, and a systematic layout to streamline operations and enhance customer service. This meticulous approach to management included well-defined roles for staff, precise procedures, and a keen focus on quality control. However, it was Ray Kroc, who later acquired the franchise rights from the McDonald brothers in the 1950s, that truly scaled and applied sophisticated management and control principles. Kroc expanded the franchise system, instituting rigorous training programs, standardized operating manuals, and stringent quality control measures. This helped to ensure consistency across all McDonald's outlets, enabling the company to maintain its brand image and deliver a uniform customer experience globally. The combined efforts of the McDonald's Brothers and Ray Kroc showcased how effective management and controls could be instrumental in the success and widespread expansion of a global fast-food giant.
• War Dogs (AEY): AEY's management, led by Efraim Diveroli, employs a combination of entrepreneurial ingenuity and opportunistic strategies to control their arms dealing operations. The management utilises a keen understanding of government procurement processes, exploiting loopholes to secure U.S. military contracts for weapons and ammunition. Efraim's charismatic leadership, paired with David Packouz's operational skills, enables them to navigate the complexities of the international arms trade. However, the lack of stringent controls and ethical considerations leads to a series of questionable decisions, ultimately jeopardising the success of their operations. The film portrays a management style marked by risk-taking, adaptability, and a willingness to bend the rules, showcasing both the opportunities and pitfalls of their entrepreneurial endeavors in the high-stakes world of arms dealing.
• Moneyball (Oakland A's): The Oakland Athletics applied effective management and controls principles exemplified in the concept of Moneyball. Beane revolutionised the traditional approach to team management in baseball by prioritising data-driven decision-making and statistical analysis over conventional scouting methods. This exemplifies the importance of clear organisational structures and strategic planning in the sports industry. Beane's focus on undervalued player metrics and statistical indicators, rather than relying solely on subjective evaluations, was a form of robust internal control. By embracing this approach, the A's were able to compete successfully against teams with much larger budgets. Beane's adaptability and continuous improvement mindset, as portrayed in the book "Moneyball," demonstrated the importance of staying ahead of industry norms and reevaluating strategies in response to changing circumstances, showcasing the application of effective management and controls in a dynamic environment.
• Explore further insights on How to implement systems and procedures derived from our case study movies: The Founder, War Dogs and Moneyball by clicking here.

CONTEXT

Business plan development is the process of creating a business strategy and plan to help a business implement its vision and achieve its goals over time. The primary goal of business plan development is to create a strategy for moving a business from its current state to its desired state through a series of business actions. The skills programme provides entrepreneurs and business managers with a platform and tools for business strategic planning.

Key Lessons

Skills programme output

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Enhancing Efficiency: Policies and Systems for SME Success

Systems: Systems are the organised processes and methods that a business uses to accomplish its goals and objectives. They are designed to streamline operations, improve efficiency, and ensure consistency in business practices. Some common types of systems in a business include:

• Financial systems
• Inventory management systems
• Customer relationship management (CRM) systems
• Human resources management systems
• Project management systems

Policies: Policies are guidelines and rules that govern the behavior and actions of employees within a business. They provide a framework for decision-making and ensure consistency in how the business operates. Policies cover various areas, such as:

• Code of conduct
• Workplace health and safety
• Equal employment opportunity
• Privacy and data protection
• Information technology usage

Procedures: Procedures are step-by-step instructions that outline how specific tasks or activities should be performed within a business. They provide detailed guidance on the sequence of actions required to achieve desired outcomes. Procedures help ensure consistency, quality, and compliance with organisational standards. Examples of procedures include:

• Employee onboarding
• Inventory management procedures
• Customer complaint handling
• Financial reporting procedures
• IT support request handling

A management control system incorporates checks and balances to detect inconsistencies, prevent waste, and resolve discrepancies in business operations. Consistent application of controls, policies, and procedures throughout the organisation ensures alignment with best practices, maximising the return on activity investment. Adopting efficient and effective practices enhances overall operational effectiveness and customer satisfaction.

Define the scope of your management system, which may encompass the entire organisation, specific functions, sections, or functions across multiple businesses. Ensure that scope determinations are reasonable and consistent.

Assess your organisation's level of control and influence over activities, products, and services from a life cycle perspective. Determine control over environmental aspects such as procured goods and services, outsourced processes, product performance requirements, and end-of-life treatment (recycling, disposal, etc.).

Identify and assess internal and external issues that may impact your management system's ability to deliver intended results. Learn about different types of issues affecting organisations.

Utilize the context analysis template to identify internal and external issues relevant to your organisation's strategic direction. This analysis aids in achieving the intended result(s) of the management system.

Operational Excellence: McDonald's Systems and Procedures Explained

The McDonald's story isn't just about flipping burgers; it's a masterclass in effective management and controls. Ray Kroc, recognising the need for consistency and efficiency, introduced a standardized system that became the linchpin of their success. The McDonald brothers, with their Speedee Service System, laid the foundation for a management approach that prioritized precision in operations. This meticulous attention to detail and streamlined processes set the stage for McDonald's meteoric rise in the fast-food industry.

The incorporation of robust management and controls in the McDonald's saga wasn't just a managerial strategy; it was a catalyst for revolutionising the fast-food industry. The standardized processes, from food preparation to customer service, ensured a consistent experience across all McDonald's outlets. This not only enhanced operational efficiency but also contributed to the brand's reputation for reliability. The impact was profound—McDonald's became a global phenomenon, with its golden arches symbolising a taste of familiarity and quality management.

Entrepreneurs, take note: the McDonald's story offers invaluable lessons in strategic management. Implementing standardized processes and controls isn't just about structure; it's about creating a foundation for scalability and growth. The impact of effective management reverberates beyond the operational realm—it builds a brand that customers trust. So, when plotting your entrepreneurial course, channel the spirit of the Golden Arches. Embrace meticulous management and controls, and watch your venture soar to new heights.

Transform SME Operations with Optimised Systems and Procedures

Systems:Systems are crucial for a business due to the following reasons:

• Efficiency: Well-designed systems streamline operations, eliminate redundancies, and increase productivity.
• Consistency: Systems ensure consistent delivery of products, services, and customer experiences.
• Scalability: Scalable systems allow businesses to handle growth effectively without sacrificing quality or performance.
• Data management: Systems facilitate accurate data collection, analysis, and decision-making.
• Collaboration: Systems promote collaboration and communication among team members, improving overall teamwork and coordination.

Policies:Policies play a vital role in a business for the following reasons:

• Guidance: Policies provide clear guidelines on expected behaviors, actions, and ethical standards.
• Compliance: Policies ensure compliance with legal, regulatory, and industry requirements.
• Risk management: Policies help mitigate risks by establishing procedures and protocols.
• Consistency: Policies ensure consistent decision-making and treatment of employees and customers.
• Culture and values: Policies reflect the organisation's culture, values, and commitment to various stakeholders.

Procedures:Procedures are essential for a business due to the following reasons:

• Standardisation: Procedures establish consistent and standardized approaches to tasks and activities.
• Efficiency: Well-defined procedures optimise workflows, reduce errors, and increase efficiency.
• Training and onboarding: Procedures serve as a reference for training new employees and ensuring they understand their responsibilities.
• PQuality control: Procedures outline quality standards and processes, ensuring consistent delivery of products or services.
• Audit and compliance: Procedures enable auditing and compliance checks to ensure adherence to regulations and internal controls.

Optimise SME Performance with Effective Systems and Procedures: Unveiling Moneyball's Winning Playbook

In the riveting tale of Moneyball, Billy Beane and Peter Brand redefine the game of baseball through innovative management and controls. Traditional scouting methods took a back seat as the Oakland Athletics embraced a data-driven approach to player selection. This strategic shift in management involved meticulously analysing player statistics, focusing on undervalued assets, and challenging conventional wisdom in the baseball world.

The data-driven controls implemented by Beane and Brand had a seismic impact on the Athletics' performance. By leveraging statistical insights, they identified undervalued players who became the unsung heroes of the team. This strategic management not only optimised player selection but also maximised the team's limited resources. The result? The Oakland Athletics emerged as formidable contenders, proving that a well-managed, data-driven approach could disrupt the status quo and lead to unprecedented success.

Billy Beane and Peter Brand's approach to management and controls offers valuable lessons for businesses beyond the baseball diamond. Embracing data-driven decision-making provides a competitive edge, enabling organisations to identify inefficiencies, mitigate risks, and optimise resources. The Moneyball story emphasises the importance of challenging conventional norms and leveraging data as a strategic asset. In the realm of business, effective controls grounded in data can be the game-changer that propels a team or company to victory.

Implementing Effective SME Policies and Procedures: Key to SME Success

Implementing effective SME policies and procedures involves establishing clear, well-defined guidelines and standardized processes that govern daily operations, compliance, and strategic decision-making. This includes developing comprehensive policies that address key areas such as finance, human resources, inventory management, and customer service, ensuring all employees understand and adhere to these standards. By instituting robust procedures, SMEs can streamline workflows, reduce inefficiencies, and mitigate risks, thereby enhancing operational efficiency and fostering a culture of accountability. Effective policies and procedures also facilitate regulatory compliance, improve resource allocation, and support sustainable growth, ultimately empowering SMEs to navigate challenges and seize opportunities in a competitive business environment.

Determining Organisation Context

Your organisation must now identify and assess all internal and external issues that may have an impact on your management system's ability to deliver the intended results.

Interviews, questionnaires, surveys, and research could all be used to assess the organisational context. Cross-functional expertise is required to identify the full breadth of issues, such as finance, training, human resources, commercial, engineering and design, and so on.

Understanding of the Key Internal and External Issues

You should gain an understanding of the key internal and external issues that affect your business, as well as establish processes to capture, monitor, and review these issues. The following types of documents and tools are frequently used to provide context information:

• Policy statement(s) outlining your organisation's mission and strategic goals;
• Individual strategy documents that serve as the foundation for your organisation's policies and provide a roadmap for achieving its objectives;
• Meeting minutes in which the context is routinely discussed and monitored;
• Risk assessments of external and internal issues that are structured;
• External issues are analyzed using the PESTLE template (Political, Economic, Social, Technological, Legal, and Environmental).
• For internal issues, use SWOT analysis tools (Strengths, Weaknesses, Opportunities, Threats).
• Documented information describing the organisational context, which was included in a quality manual.

Identifying and Analysing External Issues

Political, financial, and economic trends, customer demographics, and emerging product developments are examples of external issues. You should conduct a PESTLE analysis to gain a thorough understanding of these circumstances, as well as the macromarket in which your company operates.

PESTLE analysis is a framework for assessing market and growth potential in relation to external political, economic, social, technological, legal, and environmental factors. External factors may typically influence the following:

• Cultural, social, political and regulatory;
• Innovation, technology, industry requirements, market requirements, suppliers and partners;
• Financial, economic, natural and competitive issues, whether international, national, regional or local;

Sources of information relating to external issues might include:

• Market environment, economic conditions, new technology, new markets, and customer expectations;
• Supplier intelligence reports, political considerations, investment opportunities, social factors, and so on;
• Identification of factors relating to legislative and regulatory changes, including environmental and health and safety implications;
• Product/service performance feedback and lessons learned
• External risks and their treatment are recorded in a register.

A workshop approach frequently allows for the exchange of ideas and provides an effective and efficient means of achieving a valuable outcome. The workshop could simply be a discussion to identify issues that can be mapped out using PESTLE analysis (Political, Economic, Social, Technological, Legal, and Environmental). This method helps to structure the conversation and achieve buy-in to what is frequently perceived as a peripheral or niche area.

To be compliant, evidence demonstrating that your company has identified all relevant internal and external issues at regular intervals should be reviewed. Although no documented information is required to define organisational context, it is beneficial to retain the following types of documented information to help justify compliance:

• Business plans and strategy reviews;
• Quality manual
• Competitor analysis;
• Economic reports from business sectors or consultant’s reports;
• SWOT template analysis output;
• PESTLE template analysis output;
• Risk and opportunity assessments;
• Statement contained within a Management System Manual;
• Minutes of management review meetings (that show decisions and actions relating organisational context);
• Process maps, tables, spreadsheets, mind mapping diagrams.

Identifying and Analysing Internal Issues

To understand the internal issues of a company, it is essential to analyze its strengths and weaknesses while identifying relevant opportunities and threats. A SWOT analysis is a valuable tool for reviewing and evaluating current business strategies, the position and direction of the organisation, business propositions, and other commercial leads.

The SWOT analysis is structured to ensure that weaknesses and threats are considered as inputs for determining risks and opportunities. Internal issues are typically influenced by the following factors:

• Organisational Structure: Assess the effectiveness of your company's structure in facilitating communication, decision-making, and overall efficiency.
• Company Culture: Examine the values, beliefs, and practices that shape the work environment and impact employee morale and productivity.
• Resource Allocation: Evaluate how resources, including human capital, finances, and technology, are allocated and utilized within the organisation.
• Operational Processes: Analyze the efficiency and effectiveness of internal processes and workflows that contribute to the delivery of products or services.
• Employee Skills and Capabilities: Identify the skills, expertise, and capabilities of your workforce to determine if they align with the organisation's goals.
• Technology Integration: Assess the integration of technology within the company and its impact on operations, innovation, and competitiveness.
• Financial Health: Review the financial stability and performance of the organisation, including revenue streams, expenses, and profitability.
• Market Positioning: Examine how your company is positioned in the market relative to competitors and how well it meets customer needs.

Sources of Information Relating to Internal Issues Include:

• Organisational structure, including role and responsibility assignment and governance arrangements;
• External reports demonstrating how well your company is performing;
• Statements about your company's mission, vision, and core values;
• The importance of business ethics and organisational codes of conduct is emphasized.
• Employee feedback gathered through opinion polls;
• Systems and processes for capturing and deploying knowledge and lessons learned in information management;
• Studies of organisational capability, identification of load/capacity and resource requirements to meet demand;
• Register of identified internal risks and how they are addressed.

Comprehensive Document Control Procedures for Small Businesses

All Documents required by the Sales and Marketing Management System shall be controlled. The Document Control Procedure defines the controls needed to:

• Approve documents for adequacy prior to issue.
• Review and update as necessary and re-approve documents.
• Ensure that changes and the current revision status of documents are identified.
• Ensure that relevant versions of applicable documents are available at points of use.
• Ensure that documents remain legible and readily identifiable.
• Ensure that documents of external origin are identified and their distribution controlled.
• Prevent the unintended use of obsolete documents, and to apply suitable identification to them if they are retained for any purpose. All transactions and other significant events should be clearly documented, properly classified and readily available for examination.

War Dogs Management and Control Dilemma: Navigating the Arms Trade Compliance

AEY, the protagonists in the War Dogs tale, found themselves entangled in the complex world of arms dealing. Management in this context wasn't just about organisational structure but a delicate balancing act between legality, ethics, and profit. Ephraim Diveroli and David Packouz had to walk a tightrope, managing a business in an industry fraught with legal intricacies and moral dilemmas.

In the Wild West of arms trade, traditional controls took on a whole new meaning. AEY had to navigate strict government regulations, international laws, and the ever-present risk of being caught in the crossfire of political interests. The controls weren't just about financial management but extended to legal compliance, risk mitigation, and ensuring the ethical conduct of the business.

The management and control decisions made by AEY had a profound impact on their bottom line. While the arms trade presented lucrative opportunities, the ethical and legal challenges could not be ignored. AEY's choices influenced not only their financial success but also their reputation and the long-term viability of their business. The balancing act between profits and principles became a defining feature of their management approach.

AEY's journey offers lessons for managers operating in high-stakes environments. Effective management goes beyond traditional business controls; it requires a keen understanding of the legal and ethical landscape. The impact of decisions in such contexts can reverberate far beyond the financial ledger. AEY's story underscores the importance of robust controls that consider the broader implications of business operations.

Implementing Effective SME Systems, Policies and Procedures

Systems:To implement systems effectively in a business, follow these steps:

1. Assess business needs: Identify areas where systems can improve efficiency, streamline processes, or address specific challenges.
2. Research and select appropriate systems: Explore available options and choose systems that align with your business goals and requirements.
3. Plan implementation: Develop a comprehensive implementation plan that outlines timelines, responsibilities, and resources needed.
4. Train employees: Provide training sessions to ensure employees understand how to use the systems effectively and efficiently.
5. Monitor and evaluate: Continuously monitor the systems' performance, gather feedback, and make adjustments as necessary.

Policies:To implement policies effectively in a business, follow these steps:

1. Identify policy needs: Determine the areas where policies are necessary to guide employee behavior, ensure compliance, and align with company values.
2. Develop policies: Draft clear and concise policies that outline expectations, procedures, and consequences.
3. Communicate policies: Share policies with employees through meetings, handbooks, or online portals, ensuring understanding and acknowledgment.
4. Training and education: Provide training on policies to ensure employees are aware of and understand the guidelines.
5. Enforcement and monitoring: Consistently enforce policies and monitor compliance, addressing any violations promptly and appropriately.

Procedures:To implement procedures effectively in a business, follow these steps:

1. Identify process areas: Determine the critical processes that require standardized procedures to ensure consistency and efficiency.
2. Document procedures: Clearly document step-by-step procedures, including key instructions, roles, and responsibilities.
3. Communicate procedures: Share the documented procedures with the relevant employees and teams, ensuring accessibility and understanding.
4. Training and practice: Conduct training sessions and provide opportunities for employees to practice and familiarize themselves with the procedures.
5. Review and update: Regularly review and update procedures to incorporate improvements, changes, or lessons learned from experience.

Contrasting Business Systems, Policies and Procedures: McDonald's, Moneyball, and War Dogs

McDonald's: Standardisation, Franchising, and Customer-Centricity

In the realm of fast food, McDonald's thrived through a model emphasising standardisation and franchising. Management controls centered on maintaining consistency across franchises, ensuring a uniform customer experience. The impact was a globally recognised brand known for efficiency and customer-centric operations. The emphasis on controls facilitated scalability and brand reliability, setting McDonald's apart as an industry leader.

Moneyball: Data-Driven Disruption in Baseball

Moneyball revolutionised baseball management by challenging conventional scouting methods. The A's, under Billy Beane, adopted data-driven controls, selecting players based on statistical analysis rather than traditional perceptions. The impact was profound; the team achieved success with limited resources. This approach showcased the power of strategic management controls grounded in data, disrupting the traditional norms of player selection in sports.

War Dogs: Entrepreneurial Risk and Ethical Dimensions

In the world of arms dealing, War Dogs unfolded a narrative of entrepreneurial risk. The management controls, albeit unorthodox, were rooted in seising opportunities in the arms industry. Ephraim Diveroli and David Packouz navigated ethical challenges, showcasing the impact of personal values on business decisions. The story highlights the importance of ethical considerations within entrepreneurial ventures and the necessity for controls that align with legal and moral standards.

Bridging the Insights: Common Threads and Divergence

While each narrative presents distinct management and control strategies, a common thread is the need for adaptability and innovation. McDonald's thrived through standardized controls, Moneyball disrupted with data-driven decision-making, and War Dogs navigated risky terrain with an entrepreneurial spirit. The impact of these differences lies in the industries they operate in, yet the essence remains - effective controls, whether standardized, data-driven, or ethically rooted, are pivotal for success in the complex landscape of business.

Maximizing Resources: Policies and Systems for SME Success

In essence, the key takeaway from the discussion centers on the critical interplay between effective management, robust controls, and the resultant impact on a business's overall success. Firstly, the emphasis is placed on the significance of adept leadership and management practices. Businesses are encouraged to prioritise visionary leaders who can articulate clear goals, foster a positive organisational culture, and allocate resources judiciously. This leadership approach not only motivates employees but also ensures that the organisation is agile, adaptable, and well-positioned to navigate the complexities of the business landscape.

Secondly, the importance of implementing comprehensive controls cannot be overstated. Internal controls, ranging from financial safeguards to fraud prevention mechanisms, are highlighted as essential components in maintaining accurate reporting and safeguarding organisational assets. The discussion underscores the necessity of regular audits and assessments to identify areas for improvement and adapt controls to the evolving nature of risks. The integration of technology, particularly data analytics, is proposed as a means to enhance monitoring and prediction capabilities, enabling businesses to stay ahead of potential issues and proactively address challenges.

Lastly, the key takeaway revolves around the synergy between strong management practices and effective controls, creating a harmonious balance that optimises operational efficiency and risk management. By fostering a culture of innovation, transparency, and compliance, businesses can position themselves for sustained growth. The narrative encourages businesses to empower their teams to take ownership of these principles, instigating a self-driven commitment to excellence in management and controls. Ultimately, the integration of these principles sets the stage for businesses to not only thrive in the present but also to build resilience for future challenges and opportunities.

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